MAEZAWAKASEI INDUSTRIES CO.,LTD

The Group's products are mainly for residential water-related applications (water supply and sewerage), and net sales and operating profit are directly linked to trends in new housing starts. If housing starts decline due to changes in public policy or an economic downturn, there is a risk of a significant drop in demand. The annual securities report does not describe specific countermeasures.

If market prices surge for raw materials used in the manufacture of products such as rigid PVC pipe, operating profit will be squeezed unless the increase can be sufficiently passed on to selling prices. Rising raw material costs directly affect product cost of sales, resulting in a significant impact on profitability. The annual securities report does not describe specific hedging measures or a cost pass-through policy.

Some of the products handled are standardized commodity products for which quality differentiation is difficult, leading to a tendency toward intense price competition with competitors. If downward price pressure intensifies, it could adversely affect both net sales and operating profit. The annual securities report does not describe a specific differentiation strategy or competitive advantage.

If a large-scale disaster such as an earthquake or flood occurs at a factory that serves as a production site for the Group, it could disrupt product production and affect net sales and operating profit. Depending on the degree of concentration of production sites, there is also a risk that the Group may be unable to fulfill its supply responsibilities. The annual securities report does not describe specific countermeasures such as a business continuity plan (BCP).

If the spread of infectious disease or the deterioration of overseas conditions causes a slowdown in housing construction or a decline in new housing starts, it could affect net sales and operating profit. Geopolitical risk is a compound risk that can also spill over into higher raw material procurement costs. The annual securities report does not describe specific countermeasures.

Due to labor shortages resulting from population decline, there is a risk that it will become difficult to secure the personnel needed to pass on technology and knowledge. A shortage of human resources may lead to declining productivity and increased recruitment costs, potentially squeezing operating profit. The annual securities report does not describe specific countermeasures related to strengthening recruitment or human resource development.

If the Group is slow to respond to growing awareness of the SDGs and a decarbonized society, it could lead to a decline in social evaluation and reduced business opportunities, affecting net sales and operating profit. Delays in ESG response could also spill over into a loss of trust among business partners and investors. The annual securities report does not describe specific decarbonization measures.

If related laws and regulations such as the Waterworks Act, Sewerage Act, Construction Business Act, and the Act for Promotion of Quality Assurance in Housing are tightened, the introduction of new technologies and production facilities will be required, increasing costs. On the other hand, if deregulation makes new market entry easier, competition could intensify, potentially adversely affecting net sales and operating profit. Trends in laws and regulations constitute a bidirectional risk factor.